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Howard Stark and defected Soviet scientist Anton Vanko first designed the Arc Reactor. It was immense, Howard saw it as the stepping stone to create a new, stable element that would render nuclear power obsolete. But Anton saw it as a way to get rich and when Howard found out, he had Anton deported. Howard's son, Tony, miniaturized the design and uses it to power the Iron Man armor.

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History

After being critically wounded in an ambush by the Ten Rings billionaire industrialist and inventor Tony Stark was imprisoned in a cave and ordered to build a missile for them, To save his life, fellow captive Dr. Yinsen put a electromagnet in his chest to keeps the shrapnel in Stark's chest from reaching his heart and killing him. The Ten Rings offers Tony his freedom in exchange for building a Jericho missile for the group, but Tony and Yinsen knew they will not keep their word. So Tony and Yinsen secretly build a device that provides a clean source of energy called an "Arc Reactor", to power Stark's electromagnet. A massive arc reactor provided power for the sprawling complex of Stark Industries. The arc reactor was allegedly capable of powering the electromagnet protecting Tony's heart for fifty lifetimes on its own and power a suit of armor to escape. The Ten Rings attack the workshop when they discover what Tony is doing. Yinsen sacrifices himself to divert them while Stark's suit powers up. The armored Stark battles his way out of the cave to find the dying Yinsen, then an enraged Stark burns the terrorists munitions and flies away, only to crash in the desert, destroying the suit. After being rescued by Rhodes, Stark returns home and announces that his company will no longer manufacture weapons. After returning home Tony developed a more efficient arc reactor that he used to power the improves Mark II and Mark III suits as well. Although Tony reverted to the original arc reactor after the new model was stolen by Obadiah Stane to power his Iron Monger suit. The reactor had great difficulty providing enough power to the Mark III suit, being depleted to around a fifth of its power supply simply by flying Stark from his home to Stark Industries, with the last 20% being exhausted during his fight with Stane in the Iron Monger armor. Tony lures Stane atop the Stark Industries building and instructs Potts to overload the large arc reactor there. This unleashes a massive electrical surge that knocks Stane unconscious, causing him and his armor to fall into the exploding reactor, killing him.The next day, the press has dubbed the armored hero "Iron Man".

Tony Stark revealing his identity as Iron Man to the world. Six months later, Stark has used his Iron Man armor to help maintain world peace. He re-institutes the Stark Expo to continue his father Howard's legacy. The government demands that Stark turn over the Iron Man technology to them. Tony refuses claiming that foreign nations and business competitors are decades away from successfully recreating his achievements and that the armor is in fact his own property. But Ivan Vanko begins building a similar weapon in Russia. Tony's arc reactors palladium core that powers the electromagnet device that keeps him alive is slowly poisoning him and has failed to find a substitute. He grows increasingly despondent and reckless due to his impending death, and choosing not to tell anyone about his condition. Tony appoints his personal assistant Pepper Potts CEO of Stark Industries and replaces her with Stark employee Natalie Rushman. Vanko attacks him while racing at the Circuit de Monaco, using an arc reactor of his own powering whip-like energy weapons. He defeats Vanko with the aid of his portable briefcase armor and learns that Vanko is the son of his father's old partner. Anton Vanko, who had collaborated with Howard on the first arc reactor. Howard Stark and Anton Vanko first build the arc reactor. Nick Fury director of S.H.I.E.L.D. approaches Stark, revealing Rushman as undercover agent Natasha Romanoff and that Howard Stark was a S.H.I.E.L.D. founder whom Fury knew personally. Fury gives him some of his father's old material; a hidden message in the diorama of the 1974 Stark Expo that proves to be a diagram of the structure of a new element arc reactor power source. Tony successfully develops a new element and cure himself. Soon after, Vanko attacks the Expo with armored drones. But Rhodes in a heavily weaponized version of the Mark II armor arrives to help his friend battle with the drones. Tony, in his new Mark VI armor, and Rhodes battle many of the advanced machines. Together they defeat the drones. Afterwards Vanko himself shows up, now in a new, very powerful suit of armor. Neither can match Vanko, but Vanko is ultimately defeated when they fire repulsor rays at each other causing a large explosion. With his suit too damaged to continue the fight Vanko activates his suit's self-destruct mechanism, along with that of his drones apparently killing himself in the process. Stark saves Potts from the exploding drones remains. Potts quits as CEO, and she and Stark kiss. For their heroic deeds, Stark and Rhodes are awarded with meda﻿ls of bravery by ﻿Senator Stern﻿.

Tony uses new Arc reactor technology to develop a large scale version of the reactor to power his Stark Tower in New York City, which is said to have the ability keep the building running for over a year with clean energy. Loki commandeers Stark Tower to be used as the location to open the wormhole for the Chitauri to invade as it has a clean supply of energy thanks to the Arc Reactor powering it. Tony's personal arc reactor prevents Loki from taking control of his mind, as the reactor blocks this effect of Loki's staff, which normally allows Loki to control the minds of others. The Avengers, hold off the invasion well but are outnumbered by the aliens. A nuclear missile is sent by the World Security Council to destroy the city. Iron Man intercepts the missile and throws it through the portal, destroying the Chitauri fleet. The invaders die immediately. Hulk catches an unconscious Iron Man, who is revived. The Avengers arrest Loki. After the battle, the Avengers head to a Shawarma restaurant for something to eat.

Tony is haunted from his near death experience from The Avengers. Fearing he couldn't protect people he cared for. To this end, he made repeated upgrades of his armors, not only inserting various remote control devices into his forearm that would allow him to summon the new Mark XLII armor with his thoughts alone, but also created the "Iron Legion" of multiple remote-controlled armors keyed in to his physiology. Meanwhile, a string of bombings by terrorist the Mandarin has left intelligence agencies bewildered by lack of forensic evidence. When Happy is badly injured in one such attack, Tony overcomes his stupor and issues a televised threat to the Mandarin, who responds by destroying his home with helicopter gunships. Tony survive the attack and ends up crash landing in Tennessee to investigates explosion bearing the trademarks of a Mandarin attack. Stark's experimental armor lacks sufficient power to return to home, and the world believes him dead. A 10 year old boy named Harley helps Tony investigate and discovers the "bombings" were triggered by soldiers subjected to Extremis. This was discovered by Tony hacking into A.I.M.'s systems with the help of Rhodey, whose armor was upgraded by A.I.M. and thus being an user of the company's systems. Tony managed to hack into A.I.M.'s secrets, finding out they developed a experimental called Extremis, which gave its user enhanced strength and regeneration among other powers, but if unstable, it would be used as a bomb, realizing the "bombs" used by the Mandarin were actually failed Extremis test subjects A.I.M. gave him. They trace Killian to an impounded oil-drilling platform where Killian intends to kill President Ellis on live television. Stark summons the "Iron Legion" against Aldrich's Extremis solders. After Killian and the Extremis solders was defeated, Tony finally undergoes surgery to remove the shrapnel embedded near his heart by Dr. Wu. After the surgery Tony drops his no longer needed arc reactor into the sea because he finally understood that Iron Man is the man who "built" the armor not the armor that wears the man.